Attached files
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| 8-K - FORM 8-K - INTEGRAL SYSTEMS INC /MD/ | d8k.htm |
Exhibit 99.1
6721 Columbia Gateway Drive • Columbia • Maryland • 21046 • U.S.A. Telephone: 433.539.5008 • Fax:
410.312.2705 • Internet: sales@integ.com • Web: http://www.integ.com
FOR IMMEDIATE RELEASE
Integral Systems Announces Fourth Quarter and Fiscal Year 2009 Results
COLUMBIA, MD, December 7, 2009 — Integral Systems, Inc. (NASDAQ: ISYS) (“Company”) today reported preliminary, unaudited financial results for the fourth quarter and fiscal year ended September 25, 2009.
Revenue for the fourth quarter was $38.9 million, down 16% compared to the fourth quarter of fiscal 2008. Gross margin for the quarter was 32.6% compared to 45.4% for the same period last year. Fourth quarter 2009 loss from operations was $1.6 million compared to income of $7.6 million in the fourth quarter 2008. The decline in revenue was primarily the result of a $3.9 million revenue rate reserve taken to provide for potential future audit adjustments by the U.S. government relating to reimbursable rates on government programs. In late October, the Company received an unexpected notice from the government that a majority of its product development costs were being disallowed for reimbursement. The Company has been in discussions with the government and, while no assurance can be given, we are hopeful of recovering some or all this reserve in future periods. Gross margin was lower in the quarter due to higher unallowable costs in the government segment. Operating results reflect higher investments in research and development initiatives as well as the rate reserve taken in the Company’s government segment, and includes some anticipated non-recurring costs related to the management restructuring that occurred in August. Dilutive earnings per share for the fourth quarter of 2009 was a loss of $0.06 compared to dilutive earnings of $0.28 per share for the fourth quarter of fiscal 2008.
Revenue for the full year was $159.9 million versus $160.2 million reported in fiscal 2008. Gross margin for fiscal 2009 was 33.6% compared to 38.7% for fiscal 2008. Fiscal 2009 operating income declined by $25.0 million from $25.1 million reported in fiscal 2008 due to higher SG&A expenses and rate reserves for our government programs. Year-to-date 2009 dilutive earnings per share including the revenue rate reserve taken in the fourth quarter was $0.06 compared to $1.01 per share in 2008.
The Company noted that its previous full year earnings guidance of $0.15 per share had reflected $1.8 million of the $3.9 million rate reserve that was ultimately taken. Excluding the impact of the additional $2.1 million revenue rate reserve that was taken in the fourth quarter, the company would have reported full fiscal year 2009 dilutive earnings of $0.14 per share.
“2009 was a challenging year for the company. A series of one-time events impacted our financial performance, overshadowing many notable developments ranging from the renewal and extension of key contracts to the growth and expansion of our international operations,” said Paul Casner, President and Chief Executive Officer of Integral Systems. “Most importantly, as we closed fiscal 2009, we
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concluded a number of critical infrastructure initiatives which position the company for efficient and focused growth going forward, including reductions in indirect cost structures, resolution of lingering legal matters and a strengthened senior management team.”
Casner concluded, “Looking ahead, we have many reasons to be cautiously optimistic that fiscal 2010 will reflect the benefits of the initiatives we have taken to refocus the business on its core competencies, improve operational efficiencies, and create a platform for growth. We expect to build upon the momentum created by almost $100 million in new bookings already received and the elevated business activity we see in our markets.”
Mr. Paul Casner, Chief Executive Officer, and Mr. Bill Bambarger, Chief Financial Officer, will host the Company’s fourth quarter earnings results conference call on Monday, December 7, 2009, at 11:00 AM ET. Interested parties are invited to participate in this conference call by dialing: 1.888.221.9554. A replay of the conference call can be heard from 2:00 pm EST Monday, December 7, 2009, through midnight EST Thursday, December 10, 2009, by dialing 1.888.203.1112 or 719.457.0820 and asking for ID number 2364750.
ABOUT INTEGRAL SYSTEMS
Integral Systems, Inc., of Columbia, MD, applies more than 25 years experience to provide integrated technology solutions for satellite communications-interfaced systems. Customers have relied on the Integral Systems family of companies (Integral Systems, Inc., Integral Systems Europe, Lumistar, Inc., Newpoint Technologies, Inc., RT Logic, and SAT Corporation) to deliver on time and on budget for more than 250 satellite missions. Our dedication to customer service has solidified long-term relationships with the U.S. Air Force, NASA, NOAA, and nearly every satellite operator in the world. Integral Systems was named the Region III Prime Contractor of the Year by the U.S. Small Business Administration in 2009. For more information, visit www.integ.com.
Except for statements of historical facts, this news release contains forward-looking statements about the Company, including but not necessarily limited to the Company's financial projections, all of which are based on the Company's current expectations. These forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that the Company's projections will in fact be achieved and these projections do not reflect any acquisitions or divestitures that may occur in the future. The forward-looking statements contained in this news release are subject to additional risks and uncertainties, including the Company's reliance on contracts and subcontracts funded by the U.S. government, intense competition in the ground systems industry, the competitive bidding process to which the Company's government and commercial contracts are subject, the Company's dependence on the satellite industry for most of its revenues, rapid technological changes in the satellite industry, the Company's acquisition strategy and those other risks noted in the Company's SEC filings. The Company assumes no obligation to update or revise any forward-looking statements appearing in this news release.
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| Company Contact: Kathryn Herr Vice President, Marketing and Communications Integral Systems, Inc. Phone: 443.539.5118 kherr@integ.com |
Media Contact: Michael Glickman Zeno Group for Integral Systems Phone: 212.299.8994 Michael.glickman@zenogroup.com |
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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 25, 2009 and September 30, 2008
(in thousands of dollars, except share amounts)
| September 25, 2009 |
September 30, 2008 | |||||
| (unaudited) | ||||||
| Assets |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 5,698 | $ | 15,026 | ||
| Accounts receivable, net of allowance for doubtful accounts |
27,016 | 16,688 | ||||
| Unbilled revenues |
37,028 | 18,656 | ||||
| Prepaid expenses and other current assets |
1,256 | 2,542 | ||||
| Income tax receivable |
12,361 | 4,782 | ||||
| Deferred contract costs |
2,598 | 6,558 | ||||
| Inventory |
9,994 | 7,237 | ||||
| Total current assets |
95,951 | 71,489 | ||||
| Property and equipment, net |
20,368 | 17,634 | ||||
| Goodwill |
54,113 | 51,414 | ||||
| Intangible assets, net |
6,711 | — | ||||
| Other assets |
1,181 | 6,666 | ||||
| Total assets |
$ | 178,324 | $ | 147,203 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 5,771 | $ | 7,163 | ||
| Accrued expenses |
17,941 | 16,650 | ||||
| Deferred tax liability |
7,347 | — | ||||
| Deferred revenue |
12,373 | 12,403 | ||||
| Short term debt |
5,311 | — | ||||
| Total current liabilities |
48,743 | 36,216 | ||||
| Deferred rent, non-current |
8,460 | — | ||||
| Obligations under capital leases |
5,163 | — | ||||
| Other non-current liabilities |
955 | 946 | ||||
| Total liabilities |
63,321 | 37,162 | ||||
| Stockholders’ equity: |
||||||
| Common stock, $.01 par value, 80,000,000 shares authorized, and 17,331,796 and 17,246,034 shares issued and outstanding at September 25, 2009 and September 30, 2008, respectively |
173 | 173 | ||||
| Additional paid-in capital |
66,461 | 62,608 | ||||
| Retained earnings |
48,354 | 47,249 | ||||
| Accumulated other comprehensive income |
15 | 11 | ||||
| Total stockholders’ equity |
115,003 | 110,041 | ||||
| Total liabilities and stockholders’ equity |
$ | 178,324 | $ | 147,203 | ||
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| September 25, 2009 |
September 30, 2008 |
September 25, 2009 |
September 30, 2008 | ||||||||||||
| (Unaudited) | (unaudited) | ||||||||||||||
| Revenue |
$ | 38,912 | $ | 46,344 | $ | 159,933 | $ | 160,170 | |||||||
| Cost of revenue |
26,246 | 25,325 | 106,149 | 98,172 | |||||||||||
| Gross profit |
12,666 | 21,019 | 53,784 | 61,998 | |||||||||||
| Operating expense: |
|||||||||||||||
| Selling, general & administrative |
12,922 | 11,998 | 49,131 | 33,585 | |||||||||||
| Research & development |
1,363 | 1,417 | 4,550 | 3,317 | |||||||||||
| Total operating expense |
14,285 | 13,415 | 53,681 | 36,902 | |||||||||||
| (Loss) income from operations |
(1,619 | ) | 7,604 | 103 | 25,096 | ||||||||||
| Other income, net |
94 | (52 | ) | (31 | ) | 211 | |||||||||
| (Loss) income before income taxes |
(1,525 | ) | 7,552 | 72 | 25,307 | ||||||||||
| Income tax (benefit) provision |
(448 | ) | 2,637 | (1,033 | ) | 7,133 | |||||||||
| Net (loss) income |
$ | (1,077 | ) | $ | 4,915 | $ | 1,105 | $ | 18,174 | ||||||
| Comprehensive (loss) income: |
|||||||||||||||
| Cumulative currency translation adjustment |
(4 | ) | (34 | ) | 4 | 2 | |||||||||
| Total comprehensive (loss) income |
$ | (1,081 | ) | $ | 4,881 | $ | 1,109 | $ | 18,176 | ||||||
| Weighted average number of common shares: |
|||||||||||||||
| Basic |
17,360 | 17,182 | 17,317 | 17,813 | |||||||||||
| Diluted |
17,360 | 17,444 | 17,370 | 18,008 | |||||||||||
| Net (loss) income per share: |
|||||||||||||||
| Basic |
$ | (0.06 | ) | $ | 0.29 | $ | 0.06 | $ | 1.02 | ||||||
| Diluted |
$ | (0.06 | ) | $ | 0.28 | $ | 0.06 | $ | 1.01 | ||||||
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| September 25, 2009 |
September 30, 2008 |
September 25, 2009 |
September 30, 2008 |
|||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Revenue: |
||||||||||||||||
| Government Systems |
$ | 17,476 | $ | 24,181 | $ | 82,269 | $ | 83,603 | ||||||||
| Commercial Systems |
3,727 | 5,981 | 22,400 | 20,117 | ||||||||||||
| Space Communications Systems |
20,324 | 20,240 | 65,164 | 66,897 | ||||||||||||
| Elimination of intersegment sales |
(2,615 | ) | (4,058 | ) | (9,900 | ) | (10,447 | ) | ||||||||
| Total revenue |
38,912 | 46,344 | 159,933 | 160,170 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Government Systems |
16,122 | 15,532 | 64,631 | 58,795 | ||||||||||||
| Commercial Systems |
2,566 | 4,094 | 16,078 | 13,556 | ||||||||||||
| Space Communications Systems |
10,173 | 9,757 | 35,340 | 36,268 | ||||||||||||
| Elimination of intersegment sales |
(2,615 | ) | (4,058 | ) | (9,900 | ) | (10,447 | ) | ||||||||
| Total cost of revenue |
26,246 | 25,325 | 106,149 | 98,172 | ||||||||||||
| Gross profit: |
||||||||||||||||
| Government Systems |
1,354 | 8,649 | 17,638 | 24,808 | ||||||||||||
| Gross Margin |
7.7 | % | 35.8 | % | 21.4 | % | 29.7 | % | ||||||||
| Commercial Systems |
1,161 | 1,887 | 6,322 | 6,561 | ||||||||||||
| Gross Margin |
31.2 | % | 31.5 | % | 28.2 | % | 32.6 | % | ||||||||
| Space Communications Systems |
10,151 | 10,483 | 29,824 | 30,629 | ||||||||||||
| Gross Margin |
49.9 | % | 51.8 | % | 45.8 | % | 45.8 | % | ||||||||
| Total gross profit |
12,666 | 21,019 | 53,784 | 61,998 | ||||||||||||
| Gross Margin |
32.6 | % | 45.4 | % | 33.6 | % | 38.7 | % | ||||||||
| Operating expense: |
||||||||||||||||
| Government Systems |
5,501 | 6,696 | 21,161 | 17,623 | ||||||||||||
| Commercial Systems |
1,965 | 1,768 | 7,341 | 5,305 | ||||||||||||
| Space Communications Systems |
6,819 | 4,951 | 25,179 | 13,974 | ||||||||||||
| Total operating expense |
14,285 | 13,415 | 53,681 | 36,902 | ||||||||||||
| (Loss) income from operations: |
||||||||||||||||
| Government Systems |
(4,147 | ) | 1,953 | (3,523 | ) | 7,185 | ||||||||||
| Operating margin |
-23.7 | % | 8.1 | % | -4.3 | % | 8.6 | % | ||||||||
| Commercial Systems |
(804 | ) | 119 | (1,019 | ) | 1,256 | ||||||||||
| Operating margin |
-21.6 | % | 2.0 | % | -4.5 | % | 6.2 | % | ||||||||
| Space Communications Systems |
3,332 | 5,532 | 4,645 | 16,655 | ||||||||||||
| Operating margin |
16.4 | % | 27.3 | % | 7.1 | % | 24.9 | % | ||||||||
| Total (loss) income from operations |
$ | (1,619 | ) | $ | 7,604 | $ | 103 | $ | 25,096 | |||||||
| Operating margin |
-4.2 | % | 16.4 | % | 0.1 | % | 15.7 | % | ||||||||